Chinese cities experience property price rises

It has been reported by Live Trading News that China is more determined than ever to maintain property sector curbs since home prices were seen to rise in more than a third of the country’s main cities.

Of the 70 cities tracked, 25 saw prices climbing in June, the highest recorded figure since July last year and after just six cities registered month-on-month price rises during May. The capital of Zhejiang, Hangzhou experienced the highest growth rise, with an increase of 0.6 percent from May. Both Beijing and Shanghai experienced growth in the region of 0.3 percent. The sudden climb in the 25 cities has been attributed to cuts made to the central bank rates.

“Rising home prices in June were partly led by booming transactions stimulated by lower interest rates and demand from first-home buyers,” explained a bureau official. “Amid positive market sentiment, some developers even raised prices.”

He went on to explain that the current cooling policy will not be eased, since the government is still focused on the long term goal of curbing speculative buying. Xinhua News Agency responded to speculation that the curbs may be eased off:

“It is local governments and property developers who are trying to push home price higher. The central government should introduce more long-term cooling measures, including taxes,” the agency announced, quoting officials and analysts.

The stern cooling measures have lowered property stocks, with China Overseas Land & Investment experiencing a decrease of 4 percent. It has been noted in a People’s Daily commentary that China’s former economic growth may be due partly to the investment of property developers, with real estate contributing to 5.5 percent of the gross domestic product over the past decade, making it a national pillar industry. The commentary went on to declare however, that the country should not rely on the same tactic in future:

“To boost economic growth now through property development would be poisonous for China.”